Gold prices recovered from their two-month low of $4,380.62 reached in early May, with Comex gold closing 1.43% lower at $4,569.9 by May end. The precious metal's decline was initially triggered by fresh US attacks on Iran that boosted the dollar and pushed oil prices higher, stoking concerns about rising inflation and clouding the interest rate outlook. However, the metal has since found support and is showing signs of recovery. The dollar rose to a one-week high, making greenback-priced bullion more expensive for holders of other currencies, adding pressure to gold prices initially before the recent recovery.
While gold struggled, silver managed to hold ground and gained 1.8% to settle at $75.58 during May, demonstrating resilience amid the geopolitical uncertainty. In the local Indian market, MCX silver closed on a positive note at ₹2,67,000 a kilogram, representing a 9.14% gain for the month. The performance of precious metals in the local market was much better owing to weakening of the Rupee against the U.S. Dollar and the rise in the import duty on gold and silver. This divergence in performance highlights the different dynamics affecting each metal, with silver benefiting from currency weakness and import duty changes that supported domestic prices.
Comex gold price continues to oscillate within the extremes of the $4,400-$5,650 range and has consolidated for a while now, with a trending move expected soon. According to technical analysis, as long as Comex gold price sustains above $4,310, expect a rally to immediate target of $4,650-$4,720, with next higher targets at $4,790-$4,830. A drop below $4,300 would warrant reassessment of the medium-term positive outlook. For silver, Comex silver price is stuck in $71-$92 range for the past few weeks, with the long-term uptrend resuming only after a breakout above $92. MCX gold price touched the short-term target of ₹1,53,000-₹1,55,000 as anticipated, with the price still confined within the broad range of ₹1,45,000-₹1,75,000.
The geopolitical tensions are creating a complex environment for precious metals, as oil prices jumped more than 3% on Thursday after Iran's Revolutionary Guards said they targeted a US airbase in response to the US attack. According to Matt Simpson, a senior analyst at StoneX, "Geopolitical tensions remain high, and we've had too many false alarms from the peace deal talks. So I think the US dollar is going to remain bid, and that means gold is likely to remain under pressure." Elevated crude prices can accelerate inflation and keep interest rates higher for longer, while gold is seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal. Federal Reserve Governor Lisa Cook on Wednesday said she feels the US central bank should hold short-term interest rates steady for now, but is prepared to hike rates if needed, with tariffs, the Iran war, and a surge in AI-related investment pushing prices higher.
Both gold and silver are still range-bound while the long-term trend stays positive, with there being no signs yet of any resumption of longer-term uptrend. While there can be a short-term bounce in precious metal prices, the current technical setup suggests that significant directional moves will require breakouts from established ranges. The uncertainty around the conflict in West Asia continues to have a key role in keeping precious metals price under check, with investors awaiting the release of US Personal Consumption Expenditures data for clues on the Fed's monetary policy path. The mixed performance in May reflects the complex interplay of geopolitical factors, currency movements, and domestic policy changes affecting precious metals markets.
